A TEXTBOOK CASE OF SELL IN MAY AND GO AWAY? OR THE FIRST SIGN OF SOMETHING MORE SINISTER? ANOTHER EXAMPLE OF THE EVER GROWING IMPORTANCE OF POLITICAL TWEETS …
Following what has been the best start of the year for many asset classes, especially for US equities as a whole which had their best January to April period since 1992, the main US equity index, the SP500, reached a new historic high (2954) on the 1st of May 2019. And just when everything started to look nice and rosy again for investors across the world, a couple of 180 characters tweets by arguably the most powerful man on the planet triggered an avalanche of equities sales worldwide. We then decided to take a deep and thorough look at what actually happened in the Equities markets, to assess whether it was a textbook case of the famous Wall Street adage: Sell in May and go away. Selloffs following record highs are usually fierce and should probably be viewed as some semblance of cathartic, particularly after 4 months of relentless upward move. As we stated in a former study (October CTA and HF catastrophe explained): drawdowns are generally seen as offensive these days. Sell in May and go away?
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